Oil surge spurs Wall Street turnaround, sends Russell 2000 to record

Oil surge spurs Wall Street turnaround, sends Russell 2000 to record

(Reuters) – Energy and industrial stocks led Wall Street higher on Thursday and the small-cap Russell 2000 hit a record, even as a rise in U.S. bond yields to fresh seven-year highs suggested more competition for equities and investors fretted over geopolitics.

FILE PHOTO: Traders and guests gather for the IPO of PermRock Royalty Trust on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 2, 2018. REUTERS/Brendan McDermid

The energy sector rose 1.41 percent, giving the benchmark S&P 500 the biggest boost, as Brent crude LCOc1 hit $80 per barrel for the first time since November 2014 as renewed U.S. sanctions threatened a fall in exports from Iran in an already tightening market. [O/R]

Smaller companies continued this year’s trend of outperforming their larger rivals with the Russell 2000 reaching a record high for the second session in a row.

Data showed the number of Americans on unemployment rolls last week fell to the lowest since 1973. Other data showed a pickup in factory activity in the mid-Atlantic region this month, with manufacturers saying they were asking for higher prices for their products.

The industrial sector .SPLRCI was up 0.61 percent, the second-biggest gainer among the 11 major S&P sectors.

“You have kind of a mixed bag of earnings numbers … the economic data generally speaking was pretty good and that’s leading to a little bit of mild buying in the market,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

On the Russell 2000, Nolte said, “I think you’re starting to see people come into that because it’s the only index that has put in a new high and you’ve got some interest.”

At 11:46 a.m. EDT, the Dow Jones Industrial Average .DJI was up 30.33 points, or 0.12 percent, at 24,799.26, the S&P 500 .SPX was up 5.79 points, or 0.21 percent, at 2,728.25 and the Nasdaq Composite .IXIC was up 14.08 points, or 0.19 percent, at 7,412.37.

The market had opened in the red, weighed by a drop in Cisco and on jitters as U.S. 10-year Treasury yields hovered at 7-year highs and the United States and China started trade talks to try to avert a damaging tariff war.

White House Chief Economic Adviser Larry Kudlow expects China to bring a proposal to the talks which would “extend the conversation and permit additional negotiations”.

Keeping the gains in check were Cisco’s (CSCO.O) 2.8 percent drop, the most on the Dow, after the company’s forecast indicated its transition to a software-focused business was a work in progress.